Report questions NC’s economic recovery

North Carolina has made significant strides since the recession, but a new report from the left-leaning N.C. Justice Center argues that communities across the state are still suffering.

“We are now seven years removed from the financial crisis of 2008, but in North Carolina wages are down, job creation is lagging and many communities are still stuck in recession,” wrote Patrick McHugh, an economist at the center and author of the report.

Michael Walden, a N.C. State economics professor, said the state’s recovery from this recession is following the same pattern as all other post-World War II recoveries.

“We tend to initially recover slowly, but then we pick up steam later, and we have actually seen job growth here more rapid than in the nation over the last five years,” Walden said.

McHugh said a significant cause of the state’s economic problems is the disappearance of a large numbers of jobs that formed the bedrock of the middle class before the recession.

“We are seeing the replacement of labor with capital — or people with machines,” he said.

This phenomenon, McHugh said, explains the average hourly wage falling by an inflation-adjusted 40 cents since 2007 — despite the state’s gross product increasing 18.5 percent over the same period.

McHugh said the recovery is bypassing many communities, with most of the job growth over the past seven years occurring in densely populated metropolitan areas — primarily the Raleigh, Durham, Chapel Hill and Charlotte areas.

“The shift towards the knowledge-based economy is really working great if you’re in an urban area that has some wonderful university in it, but you’re really still struggling if you don’t have some of those pillar institutions around,” he said.

McHugh also said there needs to be a systematic effort to distribute jobs to these areas.

But UNC economics professor Stephen Lich criticized the report’s methods and said disproportionate job growth in cities isn’t necessarily concerning.

“Some of it is just the natural trend of the migration from rural to urban areas in the absence of any job creation or destruction,” Lich said. “What is the problem with that? Jobs are still being created.”

Walden said the weak revival of the middle class is the continuation of a trend in the workforce, and there is a need for a more dynamic, adaptable education system to train and retrain workers for the ever-changing job market.

“Twenty-five percent of the occupations that we have today did not exist a generation ago, and some estimates are that half the occupations that we have now won’t exist a generation into the future,” Walden said.

“We need to have an education system that recognizes that change is the norm, not stability.”

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